The Finance Act 2022 introduced a set of exemptions and incentives to aid in the sustenance of growth and continued compliance of the startups provided they register with NBR as such and comply with a specific list of eligibility criteria. Details are as follows:
Who is a Startup?
For the purposes of this provision, startup means any company with annual turnover not exceeding Tk. 100 crore in any financial year and which:
- is incorporated under the Companies Act 1994 (section 18 of the Act);
- works towards deployment or commercialization of new products, process or service driven by innovation, development and technology or intellectual property;
- is not a subsidiary of another company holding fifty percent or more of its shares;
- is not a resulting company of a scheme of amalgamation or demerger.
However, the companies will have to register with NBR as startup to enjoy the benefits and their eligibility for registration will be dictated as follows:
| Company Incorporation Date | Eligibility |
| Before 1 July 2017 | Not Eligible |
| Between 1 July 2017 – 30 June 2022 | Eligible till 30 June 2023 |
| On or after 1 July 2022 | Till 30 June of the following year of incorporation |
What are the Benefits?
For startups, the initial years subsequent to the commencement of operation will now be termed as Growth Years. The duration will be demarcated as follows:
| Company Incorporation Date | Growth Years |
| Between 1 July 2017 – 30 June 2022 | 3 Years (1 July 2023 – 30 June 2026) |
| On or after 1 July 2022 | 5 Years (Starting from 1 July of the following year of incorporation) |
During the growth years, registered startups will be eligible for the following benefits and exemptions:
- Provision and treatment of disallowance of deductions/expenses pursuant to Section 30 and 30B of Income Tax Ordinance will not be applicable;
- Losses from the business which cannot be set off in any particular year can be carried forward over nine successive assessment years;
- The rate of minimum tax as specified by section 82C(4) will be 0.1%;
- No reporting obligation will be applicable except the annual return of income if companies grant access to its system and records to the income tax authority.
ACE Advisory is one of the leading providers of tax consultancy and compliance services in Bangladesh. We can help your entity obtain the registration as a startup from the National Board of Revenue (NBR) and with any other tax requirements.
Written By – Shahriar Hossain
Date – 25 July 2022
